Butter price tops Europe's

New Zealand butter is fetching an unprecedented premium of US$350 a tonne more than butter from Europe.

"It is extremely rare for European butter to trade at a discount to [butter of] Oceania origin," said Massey University's professor of agribusiness, Bill Bailey.

Prices in global commodity markets for European dairy products have been falling for several weeks.

The United States Department of Agriculture's online market news shows butter from western Europe selling up to US$2050/tonne, compared with butter from Oceania, selling for as much as US$2400/tonne.

Bailey said in an ASB Bank commodities commentary that prices for butter, skim milkpowder (SMP) and whole milkpowder (WMP) all slipped over the past week.

"Prices are expected to continue a slow decline for the next several months as they move toward Government support levels," he said.

But Oceania prices for the same products made in New Zealand and Australia were unchanged, leaving the European industry exporting at a discount to milk from Australasia.

Although this was not uncommon for SMP and WMP, US data going back to 1993 showed Oceania-origin butter had never cost more than European butter until late last year.

Last week Statistics New Zealand reported that total seasonally adjusted value of exports rose 7.9 per cent in the December 2004 quarter, mainly because of higher values for milkpowder, butter and cheese.

Over the full 2004 year, exports of milkpowder, butter and cheese totalled $4.977 billion, for 1.614 million tonnes, up 5 per cent on 2003 when 1.66 million tonnes worth $4.725 billion was exported.

- NZPA